Income Tax Notice
When a taxpayer files the income tax return to the department, then after the submission of the return, the department process the return and at that time department may issue various type of notice to the taxpayer, which may sometimes be in the form of Intimation or maybe some time in the form of scrutiny.
Let us learn about income tax notices and different types of income tax notices issued by the Income-tax department.
Notice u/s 139 (9) – Defective Income tax return
When processing the return, if the department finds any defect, mistake, or missing information in the return filed, the department issues the notice u/s 139 (9) to ratify the error. Department cross-verify the return from the information they already have.
The defective return shall be file within 15 days; if the response is not filed within 15 days, the return shall be treated as invalid.
Notice u/s 142(1) – Inquiry Notice before Assessment
When a return is filed, and during the assessment period, the assessing officer demands further details and documents. Then, the assessing officer may do so, and the assessee must furnish it.
Notice u/s 143(1) – Intimation of the return
When we file the Income-tax return, the same is electronically processed by the Income-tax department. After processing, the department sends the intimation to the assesses in three instances:
- tax liability to be paid
- refund to be determined
- no refund or demand, but there is an increase or reduction in the amount of loss
Intimation from the department shall be received within one year from the end of the year the return has been filed.
Notice u/s 143(2) – Scrutiny Notice
After receiving the document according to the notice, send u/s 142 (1) if the AO is still of the opinion that there is a need to do scrutiny, and then the AO may issue the notice u/s 143(2). The AO wants to satisfy that the assessee has not done any of the following:
- understated your income;
- claimed excessive loss; or
- paid lesser taxes
It is to note that the section under which it will be scrutinized is different from the one in which the notice has been issued.
Scrutiny notice can be issued up to 6 months after completion of the relevant assessment year.
No scrutiny assessment can be done of the assessee who has not furnished his return of Income. In such a case, the Best Judgment is to be done by the AO and can assess the tax liability under it.
When a person has not filed the return of Income,
Section 143(2) enables the Assessing Officer to make inquiries and do the regular assessment.
If assesses do not comply with the provisions of this section:
– It may result in Best Judgment Assessment u/s 144, or
– Penalized under Sec 271(1) (b) i.e. Rs10, 000 for each failure, or
– Prosecution under Sec 276D may extend up to 1 year with or without a fine.
Type of scrutiny notice which can be an issue:
Limited Scrutiny– These are the Cases in which the Income Tax Department has restricted the scope of the scrutiny to the particular area.Example: Claim of the foreign tax credit, sale of the property)
Complete Scrutiny – In complete scrutiny, there is complete scrutiny of all the relevant documents.
Manual Scrutiny – In some cases, scrutiny is done in detail as per criteria set by CBDT.
Notice u/s-148 – Income Escaping Assessment
Notice of Income escaping assessment by the income tax department is given if AO believes that certain incomes have escaped assessed or income has been assessed at a lower rate as prescribed by the authorities or if excessive loss of allowances has been allowed. In such a situation, AO is entitled to reassess the assessment of the relevant assessment year.
It is the duty of the AO to rely on substantial evidence before initiating procedures.
The assessing officer must conduct his operations in good faith.
Notice u/s 156- Notice of Demand
When any interest, tax, penalty, fine, or other sum is to be payable in respect to any order passed, the AO shall serve upon the assessee a notice of demand, specifying the sum so payable.
Notice u/s 245 – Set off of refunds against tax remaining payable
When an amount is payable by the assessee, and a refund has to be claimed, then such transactions are ‘inter-adjusted.’
It is kind of an intimation to the assessee, not the notice issued.
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